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B.C. Fine-Tunes New PST Exemption and Refund Regulation 

Canadian Tax Adviser

 

November 19, 2013

 

Mark Worrall and Erin Jensen
Vancouver, Indirect Tax

 

British Columbia recently released 12 pages of amendments to the "Provincial Sales Tax Exemption and Refund Regulation" (Regulation). Most of the amendments are effective retroactive to April 1, 2013, when the new PST began to apply. Some amendments appear to be corrective measures that ensure the scope of the exemption is the same as existed under the former Social Service Tax. In particular, more equipment qualifies for exemption as production machinery and equipment under an amendment that lowers the threshold for eligibility.

The amendments modify a number of exemptions, including:

 

  • Gifts
  • Software purchased by a First Nation individual or a band
  • Services provided outside B.C. in relation to taxable conveyance
  • Services supplied under warranty
  • Legal services supplied under contract
  • Qualifying production machinery and equipment.

 

B.C. has also updated several of its PST bulletins to reflect the amendments to the regulations.

 

PST exemption for production machinery and equipment
More equipment may qualify for the exemption for production machinery and equipment, which now applies to "machinery or equipment obtained for use primarily (more than 50%) at the qualifying part of the manufacturing site". The previous threshold required the machinery or equipment to be for use "substantially" at the qualifying manufacturing site, which is defined to mean more than 90%. It appears that this was a correction since the "primary use" test also applied under the Social Service Tax that applied prior to July 1, 2010.

 

Time for a check-up before PST audits start
B.C. eliminated the 12% Harmonized Sales Tax and transitioned to the 5% Goods and Services Tax and a new 7% PST on April 1, 2013. Now that the new PST has been in place for just over six months, businesses may wish to review their implementation of the new tax, including the rules and regulations on exemptions and documentation requirements, as well as testing to ensure they are remitting the proper amount of tax collected or self-assessed.

 

Contact your KPMG adviser if you require more information or assistance in dealing with the new B.C. PST.

 

 

 

 

 

Information is current to November 19, 2013. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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